Oil prices gain amid lower crude stocks and production cuts

Oil prices gained on Thursday to their highest since early March as lower U.S. crude inventories and production cuts eased worries about oversupply.

Brent crude futures for July contract rose 1.7%, or 62 cents, at $36.37 per barrel. U.S. West Texas Intermediate crude futures climbed 1.8%, or 61 cents, at $34.10 per barrel. 

Both benchmarks rose to their highest since March 11.

U.S. crude inventories dropped by 15 million barrels last week, according to the Energy Information Administration. Stocks at the Cushing, Oklahoma delivery hub fell by 5.6 million barrels. 

Oil prices were supported by OPEC and its allies’ agreed 9.7 million bpd production cut in May and June. Despite the encouraging rally of oil prices, OPEC has not ruled out the possibility of more measures to support the market.

Physical crude markets are indicating a transition from a massive oversupply in April to an unprecedented under-supply in the second half of 2020. However, the lasting economic effects of the coronavirus pandemic still weigh on oil prices. 

U.S. Federal Reserve policymakers reiterated their commitment to supporting the U.S. economy amid the fallout.